Key themes of the Big 3 oilfield service companies

Key themes of the Big 3 oilfield service companies (Part 1 of 8)

Why earnings for the Big 3 oilfield service companies are positive

Big 3 oilfield service companies—3Q13 earnings look positive

The Big Three oilfield service companies, Schlumberger (SLB), Halliburton (HAL), and Baker Hughes (BHI), all beat or exceeded analysts’ expectations for 3Q13. In this section, we give a brief overview of the three companies’ earnings, and we’ll further discuss other important takeaways in later sections of this series.

Big 3 Oilfield ServicesEnlarge Graph

Schlumberger (SLB)

Schlumberger, the largest oilfield services company, reported 3Q13 earnings per share of $1.29, 4% above Wall Street analysts’ consensus EPS $1.24. SLB’s revenues were up 4% sequentially from $11.1 billion to $11.6 billion. Company management noted that performance in its North America geographical unit was particularly strong, with help from strong offshore (Gulf of Mexico) activity and the seasonal rebound of activity in Canada, which slows down in warmer months when the ground is prohibitively soft. US onshore activity “showed impressive resilience” due to improving efficiencies, new technology, and market share gains as onshore rig counts remained relatively flat. In international markets, Saudi Arabia, Iraq, China, Russia, and Central Asia showed strength.

Halliburton (HAL)

Halliburton, the second largest oilfield services company, reported 3Q13 earnings per share of $0.83, largely in line with analysts’ consensus EPS of $0.82. Halliburton’s revenues were up 2% sequentially from $7.3 billion to $7.5 billion, driven by improvements in Latin America, Russia, the North Sea, and Angola. Earnings were affected by disruptions from flooding in Colorado, but the North America geographical segment line still had 2% sequential revenue growth.

Baker Hughes (BHI)

Baker Hughes, the third largest oilfield services company, reported 3Q13 earnings per share of $0.90 (excluding $0.09 per share of bad debt expense), 15% above analysts’ consensus EPS of $0.78. Revenues increased 5% sequentially from $5.5 billion to $5.8 billion. Management commented that strong growth came from the Middle East, Asia Pacific, Africa, and Russia Caspian. Plus, North America experienced higher margins with help from a seasonal recovery in Canada and improved performance across all product lines.

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